Modern Mobile Gamers and the Rise of Rewarded Advertising

By Shannon Jessup, CRO, Tapjoy

You can be forgiven for missing it, tucked away inconspicuously within the 355 slides of Mary Meeker’s latest Internet Trends report. But there it was, on slide 26: further proof that consumers prefer rewarded mobile advertising over all other ad types. In the study Meeker refers to, a Millward Brown report commissioned by AdReaction, more than two-thirds of consumers said they felt positive about ads that offer mobile app rewards — beating skippable pre-rolls, pop-ups, banners and other ad formats by an almost laughable margin.

And now — thanks to new data out today in our latest Mobile Modern Gamer report, “Advertising Preferences Revealed” — we can put a number to just how wide that margin is: our study found that US mobile gamers prefer rewarded advertisements over mandatory ads such as pre-roll videos 4-to-1.

It’s not surprising that consumers should want to be rewarded for their engagement and attention. Why should they have to suffer through disruptive and annoying pre-rolls or pop-ups that offer zero value when they could instead choose to engage, on their own terms and in their own time, with ads that actually offer some type of in-app reward?

What is surprising is that until fairly recently, some advertisers still resisted putting their ad budgets towards rewarded advertising, insisting instead on continuing to invest in more traditional channels such as pre-roll video because that’s what has worked for them on TV and the Internet. But the winds of change seem to have shifted over the last couple of years, and suddenly rewarded ads have become de rigueur. In the rest of this blog post, we’ll explain some of the reasons why.

A rewarded advertising primer

But first, let’s remind everyone what rewarded ads are. Sometimes called “opt-in ads” or “value exchange ads,” rewarded ads empower consumers to unlock premium content in mobile apps by watching videos or engaging with brands. They are most frequently found in mobile gaming apps, which have lead the growth of the freemium model in which consumers can download an app for free but are encouraged to engage with advertising.

Rewarded ads are not strictly the purview of games, however, as apps from categories including News & Media, Fitness & Healthcare, Finance, Education, Cooking and more have begun to embrace the freemium model as well. Our Modern Mobile Gamer study found that more than half (54%) of US consumers prefer freemium apps over those supported by mandatory ads such as pre-roll videos (32 percent) or by paid downloads (14 percent), so the number of freemium apps in the app stores only figures to grow.

With that out of the way, let’s look at what rewarded advertising brings to mobile advertisers, and why they’re allocating more of their ad dollars to the category.

Brand Affinity

Studies have shown that rewarded ads make consumers feel a positive affinity for brands that reward them for engaging with their ads. A 2016 survey by comScore found that Tapjoy’s ads were significantly more effective for driving lift in key brand metrics compared to mobile norms. In the study, Tapjoy video ads outperformed mobile norms for aided awareness, mobile ad recall and message association by 7.6x, 2x and 5.3x, respectively.

Viewability

Viewability has become a major challenge for mobile advertisers, most of whom are concerned that the current standards for viewability — 50% of the ad’s pixels viewable on screen for at least two seconds — don’t go far enough. But with rewarded ads, viewability is a non-issue. Since advertisers only pay for completed video views, they are paying for ads that are 100% viewable on screen for the complete duration of the ad. Tapjoy’s ads have been verified by Moat as delivering 98% viewability.

Performance

John Wanamaker once famously said “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” With rewarded advertising, advertisers know exactly where their budgets go and exactly what they’re getting. Rewarded advertising uses a performance-based pricing model that gives advertisers complete control over their budgets and ensures they generate a positive return on their marketing investments.

Transparency

Last summer, the Association of National Advertisers (ANA) released a 58-page report claiming that rebates and other non-transparent practices were “pervasive” throughout the US media buying ecosystem. But with rewarded advertising, the entire media model is designed to give advertisers the transparency they crave, by only charging advertisers for what they receive in return, without any wasted impressions or incomplete views.

Choice-Driven

Perhaps more than any other factor driving the growth of rewarded ads is the fact that they are powered by consumer choice. The mobile era has flipped the traditional advertiser-consumer relationship on its head, putting more power in the hands of consumers. On mobile devices — the most personal of computers — disruptive ads are no longer acceptable. Consumers instead want opt-in, skippable ads that give them full control. Advertisers have learned that by giving over that control through rewarded ads, they can actually forge stronger, more beneficial bonds with their target audiences.

Tapjoy has been pioneering the rewarded advertising model on mobile since 2009, and even before then on social platforms like Facebook. We have seen it grow and mature, and we have played a significant role in showing advertisers how they stand to benefit from it. Lately, a growing number of brands and advertisers have begun to fully embrace the model, knowing that rewarded advertising presents the best way to truly engage with mobile consumers.

But don’t take our word for it. Just ask Mary Meeker.

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